For radiology practices, 4 financial lessons learned from the COVID-19 pandemic
The COVID-19 pandemic has brought widespread upheaval to the radiology profession, affecting everything from operations to finance, human resources and regulations. With that has come numerous lessons for the field to follow now and beyond the crisis.
That’s according to a new review from experts across five medical centers, published Monday in Academic Radiology. While the past year has been painful, they believe it has also helped position the best radiology groups to navigate future economic downturns, “even in the most trying circumstances,” such as today’s pandemic reality.
“While COVID has created major disruptions for our healthcare system and has had devastating financial and medical consequences for many of our patients, the pandemic has also created many opportunities to accelerate the ongoing evolution of radiology practices,” Jonathan Kruskal MD, PhD, with the Department of Radiology at Beth Israel Deaconess Medical Center, and co-authors wrote Jan. 13. “Taking these into consideration may allow practices—especially those within an academic medical center—to transform towards a stronger, more resilient and more cohesive framework,” they added later.
Kruskal et al. offered up more than a dozen lessons learned from the public health crisis. Here is a quick look at those that affect the financial side of the equation. You can read the entire review here.
1) Undertake a financial risk assessment: The pandemic has pummeled practice cash flows, due to reduced elective imaging, unemployment and shifting payer mixes, among other factors. To give confidence to team members, the authors advocate for a financial risk assessment, whether through in-house resources or outside help.
“Through a deep dive into your financial status, this assessment can point out where your vulnerabilities lie, what your practice's attitude, tolerance and capacity is for taking risk, and can help develop budgeting strategies,” they noted.
2) Manage your practice’s operating expenses: While quick fixes such as furloughs can help temporarily relieve financial pressure, they also can be devastating to group morale. Instead, Kruskal and colleagues suggest adopting a nimbler operational structure that is responsive to abrupt financial obstacles.
“Incremental and fairly distributed steps, including temporary workforce reductions, matched to actual volume data can preserve resources but also confidence that these decisions are being made with stakeholder well-being in mind,” the writers noted.
Implementing compensation changes should be communicated carefully, they added, with frequent updates. And where possible, practices should consider first pausing capital projects and renegotiating service contracts.
“One should not ‘wait things out,’ nor is this the time to alter components of an in-place compensation or incentive plan,” Kruskal and colleagues noted.
3) Optimize your clinical income and revenue streams: The writers said it’s important to take advantage of any pandemic-specific loans or revenue opportunities. Academic practice leaders can also work closely with the institution’s financial team to craft a plan that recognizes radiology’s importance to the functioning of operations.
Imaging leaders can also optimize revenue streams by improving access, reducing scan times, adding more hours, reducing no-shows and pinpointing leakage. The writers recommended managing patient concerns and improving communication through mobile means, education, and communication about safety practices.
“The pandemic will result in more Medicaid and self-pay patients, driving a greater need for efficiency and management of your revenue cycle,” the authors noted.
4) Optimize cash flow, access, liquidity and availability: For future crises, practice leaders must make sure that investments and cash reserves are “readily available and are not tied up in complex and restricted investment vehicles.” Kruskal and colleagues recommend analyzing any restrictions on access to capital and establishing an easily accessible emergency fund to support salaries and expenses.
“Effective oversight results in immediate access to working cash in the form of cash savings, money market account or credit line,” the authors wrote. “When you do have accessible cash reserves, ensure that these are not being used to support other practices who might have their cash tied up in longer term investments,” they added.
They additionally recommended ensuring that any “fund flow agreements” with parent organizations will be honored during an emergency, along with checking to see whether commitments are protected from “institutional austerity measures.”
Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic.